Business

Japan Post CEO vows to restore trust in wake of insurance scandal

Bloomberg, JIJI

Japan Post Holdings Co.’s top executive vowed Monday to restore public trust after thousands of customers were missold insurance policies.

Chief Executive Officer Masatsugu Nagato made the remarks after bowing in apology at a news conference in Tokyo.

In an interim report, Japan Post said it found about 6,300 cases of insurance sales at post offices that might have broken the law or company rules.

The scandal broke in June with revelations that customers were potentially getting worse terms after switching to new policies recommended by Japan Post salesmen. Some were forced to pay premiums for both the old and new products at the same time.

Japan Post has suspended active policy sales while it investigates the matter. U.S. insurer Aflac Inc., a close ally of the postal giant whose biggest market is Japan, has seen sales slump as a result.

The Japan Post group will refrain from selling insurance products this year to focus on its investigation and preventive efforts. It plans to restart insurance sales in stages from January.

“Once again, we are deeply sorry for causing trouble to our customers,” Nagato said at the news conference.

“Dedicating ourselves to rebuilding customer trust is our responsibility,” he said, while denying plans to resign over the scandal.

During the five years in question, workers at the Japan Post Holdings unit who were commissioned to sell Kampo insurance, encouraged policyholders to switch to new products so they could receive more sales incentives.

Japan Post Holdings said 26,036 Kampo policyholders have called to request refunds for overpaid premiums or corrections of their now disadvantageous terms.

The affair has shocked the public, especially in rural areas where the nation’s 24,000 post offices are part of the social infrastructure, providing both financial and mail services. It has also clouded the outlook for the government’s latest divestment from Japan Post, a former state monopoly that went public in 2015.

The government still owns 57 percent of the holding company, and the Finance Ministry in May picked underwriters for a third share sale that’s expected to be conducted later this year. Past offerings were heavily marketed to individual investors.

Shares of Japan Post Holdings have dropped 21 percent this year and are down about 29 percent since they were listed. The behemoth owns nearly two-thirds of Japan Post Insurance Co., whose shares have slid 36 percent.

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